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Successful re-settlements in . How rural communities in central europe can be successful

DAVID COLE Faculty of Economics, Matej Bel University Tajovského 10, 975 90 Banská Bystrica Slovakia [email protected]

Abstract With rural-development, high-profile projects tend to garner much of the attention in terms of media coverage and political focus. In Slovakia, this can be seen with the reconstruction of some of the castles, manor houses, and other historical buildings around the country. There is, however, a private movement afoot that is quietly re- vitalizing areas and objects that have been abandoned or disused for a long period of time. Though these objects don’t have the historical significance of places of royalty, they do have significant cultural value. One such region that is undergoing resurgence and stabilization is central Slovakia, more specifically the area south of the Banská Bystrica/Zvolen commuter zone. Even as new homes are being built, old businesses and buildings are being repaired and repurposed, creating ideal small town communities. This paper will detail the small-scale efforts that are occurring on an individual level that are helping to stabilize a rural sub-set in Slovakia.

Key words: rural development, abandoned properties, creative economy, resettlement

JEL Classification: R11

1 Introduction For many demographers and economist, it has become a foregone conclusion that mass agglomeration is the key to success, both economically as a nation and for individuals with their life-goal ambitions. In the case of Slovakia, the capital city plays the role of governmental, financial, and gateway centre to the rest of the country. In addition, with two major car companies located within the commuter zone, it also plays host to automobile manufacturing. As such, has 11 percent of the population and a GDP that is 2.4 times the national average (Eurostat, 2016). Add to this, the near convergence of the and commuter zone, you have a population containing almost a fifth of the country (see figure 1). Slovakia can only claim to have one metropolitan area as its other cities are considered to be medium and small urban areas. Still, 63% of the population live outside these commuter zones (OECD, 2012).

Central European countries have been seeing significant metropolitan migration, mostly centred on the capital city for some time now. As with all nations, the agglomeration process creates a concentration of wealth, some of which is based on land value i.e. land in the urban core is likely to have appreciating assets based on location (land rent). If so much value is created due to proximity, it would seem that a land tax would play a bigger part of governments’ revenue, yet land values gets under-reported in a nation’s taxing schemes. In Australia, for example, a country that has had a long history of calculating property value based on unimproved land, one study found that land rent made up 26% of GDP; yet tax collection based on this value did not come close to reflecting this value (Dwyer, 2003). Historically, property taxes in Slovakia have been based on building size, a system that was criticized by the International Monetary Fund (2016) as it did not take into consideration price differences among cities and regions. For

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Europe, redirecting taxes based on land value would mean a need for higher density construction and cityscapes that would closer resemble Hong-Kong rather than London, Paris, or Amsterdam.

Figure 1: Slovakia’s urban centres with surrounding commuter core.

Source: Organization for Economic Co-operation and Development.

The cost burden of proximity creates a need to limit ones tangible assets (cars, home size, yards, etc.) in order to afford urban or even suburban living. If economic benefits of living were measured through tangible accumulation rather than the intangible experiences of city life, then rural communities could be seen as having a higher utility. To put it more succinctly, you can own far more stuff the further you move from the urban core especially land-based assets. It needs to be remembered that man is a creative, empire building creature, with a desire to bring meaning to one’s life and leave a respectful legacy to the future generation. For many, this creativity is expressed through individual land/home development, i.e. a man’s home is his castle. This creative outlet in the urban centre is limited to a wealthy few.

While there is much focus on the expanding economic activities in metropolitan centres, in Slovakia, a quiet small-scale reformation is occurring in a few small towns outside the commuter zone. Some small towns are being transformed and their idyllic settings are being returned to their former glory, all without significant fanfare. To shed light on this phenomenon, this paper will focus on one specific community and surrounding area in central Slovakia: the twin-towns of Pliešovce-Sása and the more rustic community of Zaježová. These communities have completely different approaches to their re-development, and are both experiencing a sort of renaissance. Through interviews with the main actors in these communities, this paper will present a qualitative study of their successful recovery. It will attempt to determine if the untapped assets of small rural communities are viable alternatives to agglomerate living.

2 Nostalgia vs. Modernity as a competitive advantage for small town communities In a pure capitalist concept, neoclassic theory would dictate that as one area becomes too expensive or too inconvenient to live in, people would migrate to a more inexpensive locations looking for better opportunities and a different style of life. Spatially, this rebalancing does exist outside of metropolitan areas, where cheaper suburbs and exurbs spring up to meet the demands for appropriate living space. An even more profound cost advantage would be to move

6th Central European Conference in Regional Science – CERS, 2017 - 613 - further afield, to the less populated rural areas outside of the influence of a metropolitan area. The cost advantage of the rural area needs to be viewed from both an economic and social point of view.

Neoclassic theory suggests that man is forward-looking and is thus mainly concerned with modernity. This view disregards the past, overlooking the historical markers that gives us our identity. This historical desire could be described as a state of nostalgia—a sentimentality for a past time or place associated with happiness. In terms of demographic spatial relationship, the small town is rooted in nostalgia and urban centres in modernity. Although this statement may seem superficial and rudimentary, there are historical references to the problem of urban modernity by philosophers, artists, and sociologists. Svetlana Boym (2002) describes nostalgic sociologist such as Max Weber, Georg Simmel, György Lukacs not as being anti-modern, but rather, critical of the effects of modernization, much of which is rooted in the urban setting.

Central European nations under the auspice of a command economy focused myopically on the future with their profound adherence to high modernity – a concept with strong confidence in scientific and technological progress; a reliance on experts (scientists, engineers, and bureaucrats); an attempt to master nature to meet human needs; spatial ordering (city planning, housing, and transportation); and a general disregard for historical, geographical, and social context in development (Scott, 1998). The end result was a cityscape of concrete and cold-grey tedium.

The post-cold-war period saw a change in central European countries from high modernity to a unique form of post-modernity. This new form of modernism can be described as a hyper- technological version of modernism (pg. 126, Appignanesi et al, 1995). The unique position of having to play catch-up to western countries led to a more distinct worship of technological-led post-modernism. In terms of geographical development, the urban centres become the launching point for this new modernity, especially the capital city.

Anthony Giddens (1990) suggests that we live in an era of disembeddedness of time and space, where there is a blurring of the lines separating the local from the global and the past from the future. Individuals no longer need to be in physical presence with each other in order to interact in what he refers to as time-space distanciation. Modern ICT is continuously allowing for the untethering of work to a specific location. This makes alternatives to urban, suburban, and exurban living possible, i.e. economic opportunities needn’t to be solely dependent on proximity to a large urban core especially when it becomes economically and spiritually repressive. Alternatively, rural economics needn’t to be solely dependent on the primary and secondary economy of farming, mineral extraction, and manufacturing.

It can be said that nostalgic sentiment is in short supply in the metropolitan centre but can be found in abundance in the rural region. This presents a competitive advantage based on the abundance of nostalgic elements found in rural areas and small towns. Authors (Martin 2002, 2004, 2005, Kitson 2004, Tyler 2004) insist that regional competitive advantage needs to include not only "hard" productivity but also take into consideration "softer" dimensions of the social economy. When applying the softer dimensions to regional development, it is the specific feature, attraction or uniqueness which has a certain value for customers/consumers in a region (residents, tourists, businessmen, and investors), and these customers prefer this value over the offerings of competing regions (Borseková, Vaňová, 2011). For the more rural setting, the competitive advantages are “soft resources” (landscape, historical, cultural heritage). These soft resources can be utilized by the small town community for the nostalgic sentiment they embody.

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3 Understanding the historical background and economic arrangements of small towns in Slovakia The country that was Czechoslovakia (ČSSR) was a classic sociological study of national economic experimentation especially during the forty year period of socialist one party (communist) rule. As such, its history is shaped by non-market and unofficial market norms. The policies of ČSSR and its command economy favoured the small town. The reasons are as follows: - Socialist policies restricted migration to the larger towns as there was a desire to have a balance population and industrial distribution by fiat (Gawdiak, 1987 pg. 90). - In an attempt to equalize wealth among citizens, great efforts were made to increase opportunities in the Slovak territory to match their Czech counterpart. By 1980, the income in Slovak territory was 80% of that of the Czech Republic, a major economic accomplishment (ibid, pg. 92). - Income differentials (less educated blue collar workers vs. highly educated white collar workers) were the lowest of any country in central/eastern Europe. This meant that there was a large population that could comfortably be considered middle-class. (Ibid, pg. 102) - There was a general unspoken treaty between the ruling KSČ political party and the populace meaning that political acquiescence would, unlike some other socialist countries, guarantee relative material security (ibid, pg. 104).

All of the above favoured relative prosperous small town communities creating a considerable amount of stable residential property. In other words, during the socialist era of the Slovak territory, small towns meant large homes and relatively large plots of land while larger cities meant “brutalist” tower blocks.

Much of the history of socialist times is still seen through the prism of the cold war and as such, it tends to create a distorted picture. In ČSSR, gardening and private agricultural production had a significant utility than went beyond the mere need for food. Individual garden cottages where built on small lots acting as weekend getaways. These cottages are found in abundance around the country with many being quite substantial in size and comfort. This is not true in western countries where such plots would be too expensive to afford, yet they exist throughout central Europe. This semi-agrarian system also extends to the small town where large homes were built for extended families. The inner courtyards of these homes became dotted with barns, sheds, and many types of out-buildings. As such, there was and to some extent still is a high utility place on small-scale land activity. If individuals desire to use their creativity with housing, gardening, and the creation of a personal legacy through tangible objects, then it is the small towns that make this opportunity possible.

The transformative period (1989-2005), was a time of destruction of capital stock and lost economic activities. The Slovak economy experienced three significant waves of seismic shock; first, the failure of socialism (1989), second, the partitioning of Czechoslovakia (1993), and the crony-capitalist period of Vladimír Mečiar (1992-1998). During this period of chaos, there was no ability to address adequately the transfers of capital stock from one hand to another or to convert it for a different use. During this time, factories faced disorganization as they lost their old customers and even if they found new customers, they lost their old suppliers (Schnitzer M, 2005). This period lasted longer than expected and led many to the notion that continuous decline was inevitable. This reflexive response sets the condition for overlooking tangible progress in unexpected areas.

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For a country like Slovakia, there is a tradition for small rural communities. Though many small rural communities are still mired in economic disconnection, others are flourishing and this is largely going unnoticed.

4 Pliešovce-Sása: A Case study of successful redevelopment Pliešovce-Sása (from here on, referred to as PS and will be considered one entity) are two small towns that are separated by roughly two kilometers of farmland and together the population is just over 3,000 inhabitants. The PS municipalities are located in a mountain basin and is a part of the geographical micro-region called the Pliešovce Kotlina, located south of the of Banská Bystrica-Zvolen commuter zone. This commuter zone has a population of around 150,000 citizens.

Figure 2 Map and photo of Pliešovce/Sása/Zaježová.

Source: Own source

Like many villages in Slovakia, PS has been a settlement for farmers for 100s of years. Real growth came during the 1920s with the first Czechoslovak republic. A rail line was built between Zvolen and Šahy at the Hungarian border. The most historically significant buildings were built during this time, e.g. the train station, the cultural house, the church, and some significant private homes.

Since 1923, there has been an army training center just outside of town for forest fighting. This training center is still in use today by NATO. As such, the army has always been a source of economic support for this area.

Though the army training center is the largest local employer, we can say that PS are mostly commuter communities with people going to the Banksá Bystrica/Zvolen city center for work.

The alternative community of Zaježová Outside of Pliešovce lies an alternative-living community of Zaježová. This is a community of small hillside farms that has since become a back-to-nature community with a prize towards living off the land. This community had 660 citizens in the 1950s, but currently has approximately 200 people living there today. Because of the significant decline in population, there are many abandoned homes in this region, mostly with significant deterioration. This community and its abandoned housing stock provide opportunities for creative individuals who wish to live in ecological harmony with nature. People here experiment with homes made with thatched roofs, logs and even hay bales. It is here, where the pre World-War II living tradition is embraced with vegetable gardens, farm animals, and harmony with nature. This community hosts a one-room/one-teacher school, a back-to-nature education centre, and a co-op where members share in the bulk purchases of staple goods and use the honour system in an unmanned store.

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Even here, the modern world creeps in as internet connection is an expectation, many commute daily by car, and land values are rising. Zaježová is 10 km from Pliešovce, which provides some of the basic needs such as a doctor, retail stores, and a basic school for older children.

Housing stock The housing stock can be divided into the four following groups: blocks of flats, new houses on new streets, socialist era house (the majority of the housing stock), and pre-World War II. This provides housing for individuals at all income levels. See figure 3.

Figure 3- Examples of housing stock available in the PS municipalities.

Pre-World War 2- Socialist-era home New homes (post-2000) Block of flats (around 1920’s) Pre-reconstruction price Price-estimate for turn- (socialist era) Pre-reconstruction price estimation- 50,000€- key construction- Average price (3 estimation- 17,000€- 70,000€ 100,000€ and up rm, 65m2)- 35,000€ 25,000€ Source: Own source

Most of the property transfers of older homes (pre-World War 2/Socialist era) are based on property inheritance. Many Slovak children want to hold on and maintain the legacy of their parents and grand-parents, a nostalgic response. Citizens of CEE countries also see homes and even 2nd homes as the best investment opportunities for the future and a way to accumulate and preserve wealth. There is a strong tradition of homeownership in Slovakia with 83.3% of Slovaks owning their homes compared to an EU average of 69.5% (Eurostat 2017).

Reconstruction of an old home is often a family affair as much of the cost savings for home purchase is in sweat-equity, i.e. DIY makes home ownership possible. Though reconstruction is expensive, in the end, a purchase of an older home in the village is still cheaper than a flat in the local city core. The key issue is to be in close enough proximity to a larger commuter zones where jobs are more plentiful. In the following section, each type of living space is discussed in more detail.

Pre-World War 2 homes - There are many abandoned pre-World War 2 era properties still available for purchase and at a significant discount. In the past few years, there have been significant efforts in revitalization of homes in this category. The pre-World War II houses tend to be linear in design with the front section for living quarters and rear extensions for small farm animals and work spaces. Demolition of unwanted sections is often necessary.

Socialist-era homes - Slovakia is a very traditional country with strong connections to past traditions however multi-generational living is one tradition that has fallen out of favour. Homes of this time were often built to accommodate 2-3 generations. For many, the socialist era housing stock is simply too big for one family, especially for today’s small family of two or

6th Central European Conference in Regional Science – CERS, 2017 - 617 - fewer children. For purchases of homes in this category, the question is what to do with all of the existing living space and how to manage winter heating.

New homes - Pliešovce has a new housing area built in a subdivision fashion, i.e. a series of parallel streets with land divided into small plots for home construction. Typical these homes start at 100,000€.1

One persisting problem with housing development is acquiring land. According to Pliešovce’s mayor, Štefan Sýkora, the town plans to build another subdivision of a mere 11.3 hectares but needs to negotiate with 116 different owners of this land. The multiple owners of small pieces of farm land is the result of the 1950s collectivization of private land into cooperatives and the re-privatization of land after socialism, much of which went to the multiple children of the now dead previous owners. Land acquisition and development planning presents a significant transactional cost to land development, especially with regards to time and effort. This bureaucratic cost is a considerable hindrance to rural development.

Blocks of Flats The newest five blocks of flats are social flats and were built by the local municipalities for low-income subsidized rent. The older flats were built during socialism mainly for the army. Slovakia does not have a tradition of building rental property with only 9.2% (Eurostat) of the population living in rentals. According to Elena Szolgayová (2017), general director from the Ministry of Transport and Construction, most rental properties are initiated by municipalities and are intended as subsidized social housing for the poor. The older socialist-era flats, sell for around 35,000€ for 65m2 or almost half of the price of flats in Banská Bystrica and Zvolen, a significant discount despite commuting.

As stated earlier, many home renovations were due to family inheritance of property, yet there still are a substantial number of properties that are abandoned. There is little incentive to transfer property nor are there any penalties for leaving property in an abandoned state. Taxes are low and often current owners are reluctant to sell at discounted prices. One possible buyer of old homes could be the municipality for use as social housing instead of building new flats. This possibility would be especially useful for the larger generational homes. Unfortunately, the current public-private partnership financial scheme for social housing makes this possibility difficult.

The Romany Factor There is no sugar-coating the issue - in Slovakia, there is very strong Romany avoidance and the PS communities have no Romany families living here. This socio-economic difference of this minority population is commonly known as the Romany problem. If there is a lack of a large Romany concentration, it would be considered a positive in the re-settlement of Slovak communities. Considering the geographical pattern of foreign investments, this also seems to be true among outsiders as well.

The Roma community is essentially disassociated from the “white” population. High concentration of the Romany minority can be found in sizeable numbers in the eastern and south-central Slovakia which acts as a deterrent to investment. In 1965-69 a dispersion policy was enforced to reduce Romany concentration (Gawdiak, 1987 p. 97). The turmoil of the 1990s left many Romanies unemployed and marginalized and a re-concentration occurred creating

1 There are so few homes in many different sizes and quality it is hard to guage the true price of a home. Yet it would be safe to say that 100,000€ would be needed to build a home in this area.

6th Central European Conference in Regional Science – CERS, 2017 - 618 - essentially Romany enclaves. A common myth is the fear of being “flooded” by high Romany birth-rates. While it is true the birth-rate is higher than the white population, it is never-the- less, declining and should reach a point of stabilization in the future (Wańczyk, 2016). Yet, this fear prevails.

With no foreseen positive return on investments, high Romany concentrated areas are seen as places to be avoided.

5 The natural experiment in labour migration between “hot-market” Nitra and the “cool market” Central/East Slovakia. There has been a lot of foreign investment in the country over the past decade. This was mainly due to the low-cost attractive workforce. There is, however, a current predicament with future investment: continue to invest in western areas of the country with little available housing stock or invest in more rural areas were housing and residential development is inexpensive and available. The question is whether the work force has been too depleted and if there is a desire for reverse migration.

The unemployment rate in Slovakia has remained so stubbornly high for so long, that it became a reflexive conclusion that there will always be an unemployment problem. This notion disregarded the possibility that this nation could achieve full employment. As such, all foreign investments into this country are welcomed. The unemployment rate has recently dipped to 7.4%, causing skilled labor shortages in the western part of the country. Despite this fact, there is a propensity for foreign investments especially in large scale manufacturing and logistics to locate in the west of the country, especially auto assembly plants (e.g. Land-Rover in Nitra and Amazon in Sereď with an addition 4,000 jobs). A main attractive factor for western Slovakia is the completion of a divided highway and its connection to the larger European highway system. There is one planned east-west divided highway system that runs from Bratislava- Žilina-Košice that is expected to be completed in 2026. There is no time-table for the completion of any north-south highway connections or another east-west highway route through the south of the country (see Figure 4).

Figure 4: Completed divided .

This map illustrates the obvious disconnection of eastern Slovakia to the rest of Europe. The country has a highway plan that would serve the country as a whole and would provide 4-lane transportation corridors throughout. Unfortunately, this plan is plagued by delays and cost- overruns. According to NDS chief Robert Auxt (2016), at the current rate of construction, the

6th Central European Conference in Regional Science – CERS, 2017 - 619 - completion of the remaining 1,137km of highways would take 103 years. This expected delay in highway construction is a serious point of calculation with regards to investment, be it private enterprise or personal individual efforts.

The high concentration of investments in the Nitra/Trnava commuter zone has the potential of running into a labour shortage, exacerbated by the lack of quality housing at a reasonable income/home-price ratio. With problems previously mentioned with the lack of new home and rental property development, it will be interesting to see how these living issues will be resolved. In all likelihood, new residential constructions will be in the form of starter flats with limited living space.

For these new businesses to succeed, employers will need to entice workers with higher pay and presumably a better living standard. Because of the high utility placed on home ownership, this pay will need to cover this expected living standard. Thus, for someone to move to where the jobs are there must be an expectation of an improved quality of life. In an American study, G. Kaplan and S. Schulhofer-Wohl (2017) found that improvements in job opportunities from moving are lower than in the past, a condition he describes as the decline of geographic specificity of occupations. More specifically, job opportunities especially among certain professions are less inclined to be found only in one specific location, e.g. an ICT worker would likely find a job in a small city or even a town just as they could in the big city. The decision to relocate somewhere will largely be dependent on that jobs ability to support the expected lifestyle. Some individual’s may relish a high-priced city that offers many life experiences that can only come with large populations. Cutting edge professions are still likely to be found in the big city and can thus still offer these intellectual opportunities and challenges. Outlier regions of a country are not devoid of these professions and there is a tendency for the “trickle down” access to technology even in small villages. The question is about what is more important to the individual; intangible life experiences of the big city and the vibrancy of the new or the accumulation of tangible property and a connection to the past.

6 Conclusion This paper was not intended to provide a definitive answer to successful development in rural communities, but rather provide a snapshot of two small towns. From an historical perspective, there is still significant interest in small-town living in Slovakia. This interest is partly fuelled by the desire to be connected to the land, not as farmers, but as homeowners in a natural setting. This is in sharp contrast to the large communities of flats found in the cities, especially in the Bratislava metropolitan region.

Towns and villages outside of the commuter core can be successful, but are contingent on a few factors. Close proximity to a major roadway helps to alleviate time/distance factor of travel and construction of roadways is an indication of regional support by the government. Romany avoidance will always be issue and is a social factor that cannot be dismissed.

A potential draw for investment in a community can be found in existing unused or abandoned objects many with cultural significance. These objects can be had at a substantial discount compare to the city core. All abandoned buildings are known and documented and the municipal authority maintains cloud-based data of each objects. If an individual indicates a desire to acquire an object, then the municipal office could offer assistance. This would, however, require initiation from individuals who are unlikely to know of an objects existence unless they are in some way connected to the community. Unfortunately, this information is not readily available to the public and there is no efforts in pull-marketing that could help find

6th Central European Conference in Regional Science – CERS, 2017 - 620 - new owners. Even if interested investors are found, the bureaucratic transaction cost especially in time and effort would still be substantial. A system needs to be created to provide information about these objects to a larger audience including the greater EU community.

There are a lot of interesting things that lie in the wilderness and all have a history to be explored. It is a history that can be owned and not just by a wealthy few.

Acknowledgements Karol Dubovský- Town historian Ing. Štefan Sýkora- Mayor of Pliešovce Mg. Iveta Hladká- Mayor of Sása Mgr. Zuzana Šajbanová- Residence of Zaježová Homeowners-Štefan Filip, Štefan Kyseľ

Photographs 1: Pictures of buildings of historical/cultural significance in Pliešovce-Sása

Old Cultural house-Pliešovce

Evangelical church-Pliešovce Catholic Church-Sása

Train station- Sása- Pliešovce

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